Earnings conference call Q4 and Full year 2015 Bo Annvik, CEO / Åke Bengtsson, CFO 11 February 2016 1
Agenda Business Highlights Market Update Sales Financials Outlook 2
2015 in numbers Operating margin of 9.3 (9.3) %, excluding one-off items. Earnings per share nearly doubled to SEK 4.28 (2.32). Sales revenue of -3% (currency adjusted) with net sales reaching SEK 4,777 (4,380) million. Cash flow from operating activities at SEK 220 (435) million. The board proposes a dividend of SEK 2.00 (3.00) and shares to be repurchased. 3
Business Highlights Full year 2015 Continued success for the new generation of disc brakes. The fastest growing product for Haldex. Disc brake revenue expected to increase with one third in 2016. Qualified by one major truck manufacturer to the next step in the negotiation process. Growing revenue for EBS for trailers. R&D project for next generation on-going. Growth in aftermarket sales in Europe and South America. Low sales volumes in North America due to declining actuator sales and lower Reman sales. 4
Business Highlights Q4 2015 North American market has continued to weaken. Customers are adjusting their inventory levels. Trailer sales and aftermarket sales in Asia have increased in Q4 despite weak Asian market in general. Restructuring program in Germany finalized. Product recall campaign is running according to plan. 5
Market update 6
Build rates Heavy truck Thousands of units North America official build rates increased by 9% in 2015. The North American market is expected to decrease by 18% in 2016. Europe official build rates increased by 9% in 2015. The European market is expected to grow with 1% in 2016. China Europe North America India Brazil Brazil and China are expected to grow in 2016 while India stays on the same level. Source: the information pertaining to trucks is based on statistics from JD Powers. Information pertaining to the trailer market in Europe is based on statistics from CLEAR, the information pertaining to trucks and trailers in North America is based on statistics from FTR and the trailer information from South America and Asia is based on local sources. 7
Build rates - Trailer Thousands of units North America official build rates increased with 14% in 2015. The North American market is expected to decrease with 8% in 2016. European build rates are 5% higher in 2015. The European market is expected to grow with 11% in 2016. China Europe North America India Brazil China and India is forecasted to show growth in 2016 while Brazil will be stabilized. Source: the information pertaining to trucks is based on statistics from JD Powers. Information pertaining to the trailer market in Europe is based on statistics from CLEAR, the information pertaining to trucks and trailers in North America is based on statistics from FTR and the trailer information from South America and Asia is based on local sources. 8
Sales 9
Sales, Haldex Group Currency adjusted revenue decline of -3% in 2015 and of -9% in Q4. SEK m Net sales 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 Q4/15 Q4/14 2015 2014 Net sales, SEK million 1,052 1,092 4,777 4,380 Growth, currency adjusted -9% 10% -3% 8% 10
Sales per region SEK m Europe SEK m North America Europe: Disc brake sales of our newest models to Trailer customers have increased. Good aftermarket sales. Decreased sales of brake adjusters. North America: The recall campaign has negatively affected the actuator sales. Lower Reman sales due to a customer with financial difficulties. 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 Asia: The Indian market has continued to recover, with sales growth as a result, while the Chinese market was weak in 2015. Asia & Middle East South America South America: In Brazil, the market has been very week in 2015. SEK m SEK m 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 SEK million 2015 2014 change 1 Europe 1,573 1,522 1% North America 2,641 2,280-5% Asia & Middle East 430 376-2% South America 133 202-25% 1 currency adjusted 11
Sales per product line Foundation Brake: Disc brake sales increased substantially in 2015. Sales of actuators declined due to the product recall campaign. Lower sales of brake adjusters because of higher disc brake penetration. Air Controls: ABS sales in South America decreased while EBS sales in Europe increased. In North America, Reman sales is still slow, which accounts for a significant share of total sales in Air Controls. An older version of an Air Controls product has been phased out as part of the restructuring program. SEK m Sales 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 Foundation Brake Air Controls SEK million 2015 2014 change 1 Foundation Brake 2,712 2,420-1% Air Controls 2,065 1,960-6% 1 currency adjusted 12
Sales per customer category Truck: Sales have mainly decreased in North America and Europe due to lower actuator and brake adjuster sales. Truck sales have increased in Asia in 2015. Trailer: Continued success for the disc brake in Europe but lower sales to Trailer customers in North America, due to weaker market conditions. Trailer sales in South America has increased. 2015: 27% Truck 29% Trailer 44% Aftermarket Aftermarket: Good sales to the European and South American aftermarket. SEK million 2015 2014 change 1 Truck 1,276 1,276-14% Trailer 1,380 1,269-1% Aftermarket 2,121 1,835 2% 1 currency adjusted 13
Financials 14
Earnings Operating margin for 2015 of 9.3 (9.3)%, excluding one-off items. Good cost control and higher sales to the aftermarket had a positive impact while lower total sales had a negatively impact on the margin. Increased cost for the product recall campaign was the main item in the one-offs. SEK m Operating income & margin % Income Margin SEK Earnings per share 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 1/14 2/14 3/14 4/14 1/15 2/15 3/15 4/15 2015 2014 change Operating income (excl one-off items), SEK million 444 408 9% Operating income, SEK million 325 233 39% Operating margin (excl. one-off items), % 9.3 9.3-0.0 Operating margin, % 6.8 5.3 1.5 Net income, SEK million 191 107 79% Earnings per share, (excl one-off items), SEK 6.00 5.47 10% Earnings per share, SEK 4.28 2.32 84% 15
Sales & Operating Margin 2011-2015 Sales, SEK m 1 400 1 300 1 200 1 100 1 000 6.4% 4.8% 5.6% 3.9% 7.1% 8.4% 7.3% 8.1% 9.7% 10.1% 9.3% 9.3% 10.6% Operating Margin, % 12,0% 10,0% 7.3% 9.7% 8,0% 6,0% 900 5.8% 6.4% 6.0% 5.6% 5.8% 4,0% 800 700 2,0% 600 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Sales, SEK m Operating Margin, % 0,0% 16
Statement of Financial Position Q4 2015 vs. Q3 2015 SEK million Dec 31 Sept 30 Quarterly 2015 2015 change Working capital 609 656-7% Intangible assets 482 475 +1% Capital employed 2 049 2 031 +1% Total assets 2 855 2 952-3% Equity 1 407 1 325 +6% Net debt -335-437 -23% Equity ratio, % 49 45 Net debt/equity ratio, % 24 33 Contingent liabilities 0 0 17
Cash Flow Working Capital & Cash Conversion Days 1 000 90 Working Capital, MSEK 900 800 700 600 500 400 300 200 76 76 71 68 66 66 62 60 62 59 57 56 60 59 63 56 55 64 68 65 80 70 60 50 40 30 20 Cash Conversion Cycle, days 100 10 0 1103 1106 1109 1112 1203 1206 1209 1212 1303 1306 1309 1312 1403 1406 1409 1412 1503 1506 1509 1512 0 Working Capital Cash Conversion Days SEK million Q4/15 Q3/15 Q2/15 Q1/15 Q4/14 Q3/14 Q2/14 Q1/14 Operating cash flow 1 154 169 19 23 208 116 124 6 Cash flow after net investments 1 102 122-24 -9 147 63 92 1 1 excluding one-off items 18
Outlook 19
Market outlook 2016 North America Lower, but still good volumes, compared with the strong year of 2015. Europe A couple of percentage points up. China Continues to be weak. India Good improvement. Brazil Somewhat weaker than 2015. 20
Haldex in 2016 As a result of the weaker market conditions and the effects of the product recall, Haldex s overall forecast is that net sales for 2016 will be lower than the net sales for 2015. Our goal is to achieve a stable operating margin, even if net sales are on the decline. Our ambition for 2016 is good profitability in line with 2015, but with a softer market it will be a challenge to reach this objective for the full year. 21
Thank You! Questions? 22